The Irrational Escalation of Commitment and the Ironic Labor Politics of the Rust Belt

Most studies of labor politics in the United States focus on those politics as they are embedded within larger electoral and national party politics. In this article, we investigate how the relationship between the United Steelworkers of America (USWA) and steelmanufacturing firms shaped the political economy of the Rust Belt. We show that the 1959 steel strike and subsequent collective bargaining agreements between the USWA and the ten largest steel manufacturers in the United States reshaped institutional labor politics and led to a greater emphasis on negotiated pension and unemployment benefits. In turn, these institutional commitments profoundly shaped deindustrialization. Pension and severance benefits motivated firm managers to sustain relatively large, antiquated steel plants and to close smaller plants in order to avoid enormous legacy liabilities. Using theoretical insights from economic studies of auctions, as well as historical and quantitative data, we show how the labor agreements shaped the choices concerning, and the timing of, mill shutdowns. We conclude that these choices help explain important variance in the fortunes of steel towns in the Rust Belt.

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